Death and total & permanent disability Your income Ongoing care for your family Eliminate debt on death or disability Don't underestimate Estate equalisation

What is it?
When planning for the distribution of their estate, a parent may wish to leave the family business to one or more of their children. This may be common in the farming community or where a parent has been grooming one child to take over their place in the family business.

But what happens where one child is catered for in this manner and another is not? Times have changed in recent years, and it may not be acceptable for one beneficiary to be left all assets at the expense of other potential beneficiaries. State legislation provides potential beneficiaries with the right to claim further provision from an estate, ie. ‘contest the will’ if it can be established that they have not been adequately provided for in the will. This may result in the asset having to be sold to provide some cash for all other potential beneficiaries (often with an accompanying capital gains tax bill!). Despite the best intentions of the parent, their wishes can be changed.

How does the strategy work?
Estate Equalisation is specifically concerned with the equitable passing of a family business to the next generation.

Estate equalisation is the process where one asset (ie. the family business) is bequeathed to one child and an asset of equivalent value is bequeathed to the other(s). Often the only method of providing this‘asset of equivalent value’ is through life insurance protection. The value of the insurance protection is realised on the death of the parent insured and is the amount of insurance cover.

An estate equalisation strategy may complement a business ‘will’. This may be relevant where family members are in business with one another - for example, if two brothers are in business together, one brother may want to pass their interest to one of their children in the event of their death (and provide another asset to the other child), but the second brother may not have children interested in being part of the business and would want his brother to buy his interest out.

The benefits Designed to facilitate your wishes being carried out through your will.
	Can help prevent family rows over inheritance.
	Can reduce the chance for your Will to be challenged in court.
	Can protect the value of your estate, since assets do not have to be sold (often with an accompanying capital gains tax bill!).

For more information contact us by phone (08) 8279 3333 or by email